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tv   The Kudlow Report  CNBC  October 5, 2009 7:00pm-8:00pm EDT

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production, not saudi arabia? and why are the oil markets ignoring the iranian nuclear threat? "the kudlow report" starts right now. good evening. i'm michelle crew saw cabrera. larry has the night off. don't you worry we still believe free market capitalism is the best path to prosperity and now, maybe the white house does, too? our own john harwood who also writes for the "new york times" posted a column today saying, get this, the white house is maybe, just possibly, considering tax cuts as a way to stir job creation. i'm coming elizabeth. this could be the big one. why such smart -- i mean, desperate measures? our chief washington correspondent john harwood broke the story. john, your column says the possible tax cuts spurred by friday's horrendous job numbers,
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right? >> reporter: there's a lot of pressure on this administration. they believe their economic program is the path to prosperity but you can't see it in the jobs' number which is is why at the briefing today, robert gibbs said it may be time for new steps. >> the economic team is certainly looking at and working on anyway, that we can create more jobs. i don't have any news on that today. >> that means they are thinking about it and here's why. look at these numbers, 9.8% unemployment right now and they say it's going to 10.5% by next june wayne total of 9 million jobs lost in this recession over the last two years and the political affects are clear. americans say jobs are their top priority for washington to tackle and jobs are the prison ch through which they'll judge how effective president obama's plan is. so the challenge for the administration between now and the state of the yun down, or perhaps earlier if they feel the
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pressure to announce sooner, how can they design a package that they feel like they can afford without driving up the deficit and will work? is it going to be cosmetic or one with a lot of bite? that's something that the economic team will be working on and we're watching it. >> state of the union? that's a long time away, right? >> more pressure before then. but one of the senior officials at the white house say it could come sooner if we feel we've got to move and one of the things to watch is 9.8% unemployment now. what happens if we go to over 10% in october or november? you could see action more rapidly than the state of union next year. >> thank you. so if indeed the president is considering supply-side tax cuts to stimulate job growth, which cuts should he implement? with us is our contributor and former labor secretary, and peter of the university of maryland and former chief economist for the international trade commission. guys, good to see you.
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peter, i'll start with you. were you shocked to read that they are thinking about tax cuts? >> shocked. my question is, is it's going to be real tax cuts? kupt the corporate tax. cut taxs across the board? or is it the usual pelosi economics? tax cuts for people who make less than $60,000 a year. giving them an extra $11.37 a month in their paycheck which they'll turn around and save anyway. secretary rice, if you were advising the president right now on a tax cut, what would you recommend? >> if i was of all let me add to what john harwood said. i think the real issue here is 2010. the mid term elections are looming. we're in the graff terrible pull already. >> we'll get to the timing. but i want to talk about why. what do you wreck for tax cuts. >> this is all about what should be in it. you want something that the republicans can grab ahold of that you don't have to have a big fight over. you don't want the deficit and debt to be centerpiece. >> and your recommendation is what? >> i would say, if i were
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guessing right now, it would be a one-year tax holiday on the first $20,000 of income for payroll tacks. >> and that will do no good at all, robert. we both know those kinds of tax cuts don't want to get us anywhere. if we want to do something we have to be serious. let's get the rate structure nailed down. >> peter, that's ridiculous. those kinds of tax cuts are -- >> we have the highest corporate taxes in the world. >> the real substantive answer -- the real substantive problem is it's difficult for the administration to say the truth which is up unmoment wife been much higher without the stimulus pa kang because they say how do we imthe stimulus package? >> most of the stimulus package that went to tax cuts got saved and they've had trouble getting the infrastructure money out the door. the administration can't get the bulldozers moving forward. >> guys, wait a second.
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robert, i want you to look at this clip from our friends at "saturday night live" and i think they left out jobs. watch this. >> almost one year and noling to show for it. you don't believe me? you think i'm making it up? take a look at this checklist. now, on my first day in office, on my first day in office i said i'd close guantanamo bay. is it closed yet? no. i said we'd be out of iraq. are we? not the last time i checked. i said i'd make improvements in the war in afghanistan. is it better? no, i think it's actually worse. how about health care reform? hell no. >> robert right, the pressure son. >> yeah, the pressure is on. the pressure is really on number one on health care reform
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because that's the one the president has staked his reputation on. he's got to get a big victory and hopefully he'll get a big victory before christmas. on jobs he has to show he's on top of it. he probably will have to do something. i would expect after health care and soon into the new year, the question we were just addressing which is a very important question is, how can you make it substantive? actually going to generate jobs? i think that will be very difficult because the economy is, to some extent, slowly bouncing back. but the underlying problem we talked about before, consumers -- michelle if i can finish the thought. you're not layer live kudlow let me finish the thought. the underlying process is consumers don't have money and they're not buying and they are 70% of the economy. >> so corporate tax cuts may spur employers because they have more money would -- >> i have no -- >> i have the burr again of being an economist and the history of these things i had
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kates if you don't do something permanent, for example, like lower the corporate tax rate permanently it doesn't have much traction or bite. temporary tax cuts for individuals like we've had with both bush and obama haven't worked so we're going to have to do something different than a tax cut for people less than $20,000 a year for a year. that idea has worked in the past so we'll have to find something new. if you want to be substantive and talk about that, then we can. >> robert? >> well, thank you, peter. >> go on, robert. >> corporate -- we know corporations are not going to invest if they don't have customers. the fundamental problem is consumers don't have the money. let's do something about trade. >> so how about a bigger payroll tax? how about a payroll tax holiday on everybody for a whole year. payroll tax for a whole year. whole year, for everybody. >> two year payroll tax for
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everybody. don't pay any social security for the next two years. what do you think? >> i would rather do something about trade than a two-year payroll tax cut. >> but if you say 20,000 is enough, how about that peter? to get a corporate tax cut like robert says? >> i don't think that a payroll tax cut for two years will give us the traction we need to get this done. i think we'll have to do something structural so we have to start investing in the jobs. >> i don't disagree but would i want be a good start? i would never say no to cut people's taxs if that's the only choice i'm given. >> i guess we have an agreement. the fundamental is problem is to get money back into people's pockets and 80% of consumers pay more in payroll taxes than they do in income taxes so i think that's a good way of doing it. at least that's a beginning. and i think republicans would go along with it.
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>> is it possible people aren't spending because their worried their taxes will go up dramatically because of health care snz. >> i think they are worried they're going to lose their jobs. they're told health care reform won't won't have traction until 2013. so i don't think their worried about that right now. their worried about the public option and all the issues we discussed here. but i don't know that the notion that they'll have to pay for it tomorrow is the reason they're not spending what they've just been given. >> i think that peter is right. they are de-leveraging this, michelle. consumers are trying to get out from under a huge pile of debt. >> all right, guys. good to see you. thanks for being here. coming up, president obama held a pep rally for doctors in support of his health care reform proposals is a health care overhaul even close to a floor debate in the senate? we'll talk toll dr. etom coburn when we come back. you're watching cnbc, first in business worldwide. ( inspiring music playing )
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president obama just won't quit when it comes to stumping for health care reform. today he invited 150 doctors to the rose garden for a presidential pep rally. nbc's steve handelsman joins us now with the details. steve? >> michelle, thanks. he's not giving up because we're getting down to the wire in a key senate committee, the senate finance committee that will vote sometime soon on health care reform with still key questions about how the vote will go unanswered. two key senate democratic liberals, rockefeller of west virginia, widen of oregon, haven't said whether they'll vote for this senate finance committee bill. they both want a public option. the key republican, key because she's the only senator who might vote "yes" on the bill, hadn't said how she will vote. but this lead into the president's move down at the white house today. tom -- former senate majority leader said if he was still in the senate, that fritz would
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vote yes. why is it important? because he's a cardiac surgeon. and that leads into why president obama brought supportive doctors down to the white house today to talk to them about health care. to get them to chair for his plan. to put pressure on the senators up here on the hill, despite all of the opposition that's surfaced. >> these men and women here would not be supporting health insurance reform if they'll really believed that it would lead to government bureaucrats making decisions that are best left to doctors. they wouldn't be here today if they believed reform in any way would damage the very critical and sacred doctor-patient relationship. >> those doctors will be watching the president will be watching. we'll all be watching when the senate finance committee votes because that will set the stage for what goes to the senate floor and the big fight that is soon to be ahead between the house and the senate versions. president made his point today, michelle, that we need reform. we can afford his plan, even
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though his exact plan exactly what he would sign he hadn't said, and he says that some kind of a public option is needed. not all senators support it, of course. not all doctors, i'm guessing that senator tom coburn who loves bill fritz would not vote the bay bill frisq would voetd and doesn't support barack obama. >> we'll find out. good seguay for our guest coming up. as steve was talking about, as the president rallied doctors and lawmakers in washington, one of america's richest men is looking to take health care reform into his own hands, jane? >> reporter: michelle, they call him the richest man in medicine and now the doctor is taking one billion dollars of his own money to hire the best in medicine, math and computer science, to build a medical information superhighway where all of your medical data combine with the best breakthroughs relevant to your condition, can be accessed
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anywhere. >> i can now -- oops -- capture the mri's. >> the doctor describes his plan as a sort of ubl utility that's both transparent, yet secure, and he says it would bring down costs while saving lives. >> you as a patient, go to see your general practitioner and you get sent to the specialist and you get an x-ray and lab and you get a biopsy and you have a po thol give. you're going to the hospital. back out to the hospital. that trail of the patient today is impossible to follow. but even by the physicians. >> he also says that the profit motive in health care needs to be changed to make it profitable to keep people healthy rather than treating illness. it's a tall order, michelle, but he's overcome long odds before. >> thank you. we welcome back to the show, oklahoma republican senator, dr. tom coburn. senator, thanks for joining us tonight. >> glad to be with you. >> i'd much prefer a discussion
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of substance over process but let's hoo get this out of the way. it looks like the senate will vote on their version of the plan and then the may lay starts. then the melee starts. will it happen? >> i don't think it will have a public option. but it will have a watered-down whether it's a co-op or trigger, but the point is we end up in the same place. >> it doesn't matter on any of those counts. you're not voting for anything with any of those elements in it? >> it doesn't solve the problem. every bill they've put forward grows the government by at least a minimum of a trillion dollars. and, for example, 88 new government programs just in the bill that the senate has considered, that's 150,000 federal employees now involved in health care that aren't involved now. there's no question we have things we need to markedly change in our health care marketing and model and cost. but having the government do it
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where it has a track record of not being efficient or effective in these areas concerning. >> any chance the final product will actually eliminate the unfairness in the tax structure. which means i would get relatively cheap health insurance through my employer but if i bruy it on the private mark i have to use tax dollars. any answer this that will be taken care of? >> that's one of the principles of the bill that myself and 16 others have put forward is to equalize the tax coat and enable people to make the independent decision about what they want for their car. it was interesting that you had the doctor that was starting the information highway. there's a lot of truth to what he says. but the patient privacy is important. remember, we got in this position because we have government-run health care in the first place. medicare does not pay for prevention.
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and we do need the incentivize it. we do need to change the way we pay for medicine. we need to pay for people keeping you healthy rather than paying for once you get sick. >> what about being able to buy insurance across state lines? i see this over and over again. all these states across the country keep adding mandates to insurance coverage. they would never say every car dealer in the state has to sell only cadillacs. but when it comes to health insurance it seems that they think every health insurance policy should be a cadillac policy and as a result, people who can only afford a chevy can't buy health insurance. >> and that's the problem with somebody else in government deciding what you need and what's best for you. and if there's anything that sums up the bills that are coming out of congress right now, sponsored by the majority, is we're going to take your freedom away. we're going to take your choice away. and we'll tell you what you can and cannot have. and by the way, when we get into crunch time, we'll ultimately limit what's available to you.
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that does two things. it denies the best health care and it eliminates the innovation that's been 75% of which has come from this country, that has advanced health the way we know it today. so the real risk for our country. real risk for freedom. and that's not to say we don't want to solve this. >> why can't i buy insurance across state lines? the whole federalist government was about interstate commerce and yet, in this one sector of the economy it's not allowed? >> because the bureaucrats like controlling it. and the fact is, if you could buy it across state lines, two things would happen. you get better value for the money you spend. number two, we'd have marked innovation and insurance products where we would want to have, for example, if i was an insurer, i'd want to insure you for 25 years. i could figure out the ways to make money at a lower rate by
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insuring you stay healthy. incentivizing you to stay healthy. by taking off the cost of preventative services in terms of a co-pay or deductible. all those things are possible. those are all things we can agree to. >> what about higher premiums on people who partake in behavior that is unhealthy? >> there's nothing wrong with that. that's called the risk. if, in fact, you're a smoker why shouldn't you pay higher? you should. >> and yet community ratings which happens more and more, this is the code word for not being able to do that. >> that's right. and so the question is -- how much do you limit that? do you limit somebody who has diabetes? the fact is, if we really get everybody insured and really have broad insurance products across the country, we spread the risk out more so that the carrying that individual that has this high risk becomes much less of what we have. here's one of the things nobody ever talks about. in the individual market you can buy the same health coverage
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less than you can buy it for in the group in many instances. if you allow interstate commerce for that it will really drop. you'll really see the price drop so it makes sense. markets allocates scarce resources better than any government ever thought about doing and we can offer protections to individuals. we can take care of those that need it. but we shouldn't ruin the best health care system in the world. >> best of luck to you. we'll be back. time toll exit the t.a.r.p.? republican senator says yes. mark walsh and jimmy p will debate it right after this. and our market all stars are coming up with the earning season stock picks. which stocks and sectors will be the big moneymakers? keep it here. (announcer) take your time to find the right time
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mark, what do you think of the idea? time to exit the t.a.r.p.? are we safe enough? >> no. he says two things in the editorial. he says give back the $333 million that's not allocated. the second thing he said is the government should be forced to exit its equity holdings. both ideas are stupid. the t.a.r.p. liquidity provided by the extra money that's ready to go will be needed in tough times. and to suggest that anybody should be forced to sell stock at a certain time is guaranteed to drive down the price of that stock. that's the way markets work. i think the senator is way off base. we need liquidity. >> i don't think he's off base. first of all, taking that money and using it to pay down the deficit is a great ideas. i think you underestimate how freaked out people on wall street are about these big budget deficits. the white house completely underestimates it. people that are democrats are very concerned about these deficits. >> deficits are an issue. but it's a different question than are the banks safe enough so that you can get rid of that
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cash pile that the treasury would otherwise have ready to go in the case of an emergency? >> i know they would love to have the money. they would love to have the slush fund they can do auto bailouts and housing bailouts. but if you look at the financial sector and stock prices, we're in a very different place than a year from now. is it safe? if it's not safe we're rapidly approaching the point where we can begin to pull out. get rid of the investments and return to normalcy. >> what about forcing a sale by a certain time? >> i'm not sure a certain time but there has to be a deadline. if you don't have a deadline it won't happen. >> why would you have a deadline for equity? why would you tell an equity holder they have to be out of stock at a certain time? that doesn't make sense. one other quick point about leftover money. the financial sector you focused on is one thing to look at. but there's a huge amount of
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unrecognized default. people want consistent solid markets. everyone's afraid of the deficit but they want certainty. >> when you inject into the government and whether it's autos are housing or -- you've injected tremendous uncertainty of the future of this company. >> no. but the uncertainty -- the certainty was guaranteed by the lender of last resort, which was the government. look at chrysler and boeing. we bought stock and we made money. >> is it a certainty when you have the government going to the bank and saving auto companies? there's absolutely zero certainty. remember the tax cuts we were talking about, i know how to pay for them with it is 3$300 billion. >> do you think gm is too big to fail? >> no. >> i don't think so either.
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>> the auto industry is not the way to go on this one, mark. >> but the auto industry is only -- >> if you -- it didn't have to happen. >> come on. >> let's get back to the banks. you know, mark, there is this idea that if treasury has $300 billion ready to go it's like any government that has an army, they tend to want to use it. tough money it burns a hole in your pocket when you're more likely to use it than not. you should allow institutions to fail. >> you believe that markets behave like people. to say it's burning a hole in the pocket that implies that -- >> you're personalizing what i'm suggesting is a market dynamic here. >> i'm suggesting human nature. >> do you people that voted for t.a.r.p. thought it would be used to bail out the auto industry? the word of "slush fund" that's what happened. >> he has a very good point, mark. you have the $300 billion
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sitting there. you think barney frank isn't going to eye that and figure out something he wants to do with it. >> you're dragging out all the good terms. slush fund, barney frank -- >> are we wrong? >> yes. >> these markets are not out of the wood. markets demand certainty. you can talk all day about who we should have attacked first. but of course, some companies are too big to fail. but you have to have robust sectors in finance and others and right now to have nonliquidity and to give the money back we're going to be right back to where we were. >> this is the first step to employing market discipline. maybe that's a strange words to you. market discipline. i'm against any more bailouts unless it's to the media. >> do you think government bailouts in general are always bad? do you think chrysler failed? do you think boeing should have failed? >> oh, yeah. >> give me an example of a good one. >> we made money on chrysler.
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>> thank you, guys. good to see you. coming up, the supreme court returned to the benchmarking the beginning of justice sonia sotomayor's first full material. hampton pierce tells house how the court's do ket could affect your portfolio. a lot of big business cases coming up. we'll be back. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online.
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sonia sotomayor's first full term as supreme court justice kicked off today. the court reconvened for its next nine-month term and it has key cases for businesses on the docket. hampton pearson joins was the details. >> reporter: hi, there. business heavy calendar of cases for a new justice with lots of business experience. justice sonia sotomayor join penguin high court on this, the first monday in october. more than two dozen cases focused on things like executive pay, intellectual plot. even opening the door to a partial repeal of sarbanes-oxley. the top business case, bichlt. lskey versus capos. can a unique business message be patented. the question is, can a commodity hedging fund strategy be worthy of a patent?
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executive pay and shareholder rights collide in jones v harris associates. the high court must decide whether mutual fund shareholders can sue advisors for charging excessive fees. >> the struggle for the court here is over what standards, if any, do they'll really want to write on to this statute to govern the compensation? ize a huge case for the funds industry, obviously, and for investment advisors and a huge case for shareholders because it will govern how much these people can charge. >> another huge case free enterprise fund versus. public company accounting oversight board and it focuses on at what point does lack of presidential control over independent agencies violate the separation of power's principal. it's an important line in the sand if congress and the administration, try to craft major regulatory reform when it's all summed up by the end of this term, we should have a much better fix on this court's view on regulating business. >> and in particular, her stamp.
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when it comes to sonia sotomayor, a lot of curiosity as ow she's going to rule. >> the one thing that's already obvious is she's asking a lot of questions on any and all cases right from the start. a sharp contrast, for instance. i've covered the court for over a decade and we rarely hear questions from the bench from justice care lense thomas. >> interesting. thank you. coming up, the market chipping away at last week's losses with a triple digit gain on the dow. where should you be putting your money as earnings reports begin to roll? we'll tell you after this.
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the markets reached back to last week's losses with a triple digit gain. bertha has the details. bertha? >> reporter: michelle, investors have rediscovered their appetite for risk and for high yield. had a very strong ten-year treasury inflation protection
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bond sale today. we also saw a lot of people move out of the safe havens and look for riskier status after the imf said the service index expanded an robert gibbs, during the daily briefing, down played the prospect of another stimulus package. financials were sharply higher led by wells fargo after goldman sachs upped the bankers stock seeing the street is underappreciating the firm's ability to grow profits. they rose to an overall from atrack toif neutral say that analysts are estimating the earnings. with a greater appetite for risk they sent oil above $70 a barrel helping to fuel energy stocks and materials also gaining on dollar weakness. alcoa shares up nearly 5%. the aluminum giant is kicking off earnings season on wednesday. could be some optimism there if we see some topline growth. and more deal talk fueling
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optimism. reports that the networking gear maker is putting itself up for sale. the "wall street journal" saying oracle that acquired hp would be among the potential bidders. busy day. >> let's find out how to play the market with our investors. they hit a speed bump. the consumer confidence, ism manufacturing. we took advantage of the selloff last friday and increased our allocation equities. we're now -- >> you bought more stocks last week?
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>> we bought into that unfriday. we're running a 10% overweight in our stock and bond fund which is our flight chip allocation product and we believe that we're going to be at the 1200 level on the s&p over the next three months. >> 1200 on the s&p. michael, what do you think? >> from phil's mouth to god's ear, bring it on. i'd love to see it. i feel like the market is out over it's -- that 65% runup in six or seven months seems to be a bit aggressive for me. i'm really concerned with gold man's call today on the banks that earnings are underestimated. they're going to continue to take chargeoffs against their reserves. i mean, i don't see where they have organic's earnings growth. that seems like the oil call they made when oil was $147 and they came out with a $200 a barrel. >> so you're doing opposite of what phil did. were you selling them? >> i did establish a new position last week. >> so you bought stocks? >> i did.
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i also tripled some that were getting bigger, michelle. i'm careful. >> okay. what do you -- here's what concerns me. i look at the bond market and i see that ten-year yield that keeps falling and falling. it's below 3.2%. normally that's a signal that the company is going to weaken. but the yield curve is very steep. that's a same that the economy will strengthen. phil, which one do i believe? which one do i act on when it comes to the stock market. >> we took it down from 95 to 90 on friday. we think the treasury is at 3.2% was too low. >> not enough yield in that for you to buy? >> yield should be higher. we think the yield will back up towards the 4% neighborhood as this economy continues to develop strength. we think the recession is over. we think it ended in the second quarter. we think the third and fourth kwooik earnings will be quite good and we started to see consensus earnings start to move up and that will nul the rally in the equity market.
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>> they say the 10-year lead would go to -- maybe 2.5%? that would suggest inflation? >> i think phil orlando is a smart guy. we could see the rates move higher. here's my problem with the recession being over. it might be over if all of the stimulus as it begins to come out, gains real traction. the real end-user demand shows up. it hadn't shown up yet. for a real recession to be over, not to have a double-dip means that somehow, the consume her come alive again and i'm just not that confident and i don't see it happening until 2010. >> when i look at the sectors that you like, consumer staples, health care, you also like consumer discretionary, i guess. what are you telling people when it comes to sectors about what to buy? >> key thing is small cap is our favorite. we love international. >> because of the dollar? >> it is. we think the overseas economies
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which are much stronger than us right now will drive this thing. with the weaker dollar our exports are flying off the shelts. >> is the coca-cola's of the world do darn well? >> that's why we like the consumer discretionary. the coca-cola, pepsi, phillip morris, they'll do great with these translation gains which will boost their quarterly sneerngs was that an argument of the cuff link theory? >> to some degree it is. china, japan, germany, france, brazil, they already reported positive second quarter gdp. with the weak dollar they are still buys goods. the average s&p company does 40% of its business overseas. because our manufacturers because we've got this liquidation cycle that's been 11 months in a row, it's going to nurn a restock k cycle and that will create jobs. the consumer will laugh but we think it will play out over
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time. >> michael far, you mentioned you bought -- the technology outsourcing play? >> we like eccentric. huge cash flow and almost no debt at all. we think the valuation looks good. it hadn't really participated in this really. i look for things when nobody else seems to like them and nobody seemed to like them right now. i continue to like health care. i continue to like technology. i own a couple of financials but i'm not going there yet. goldman sachs, jp morgan are the two that i'm kind of sticking with for now. but i continue to feel -- >> you're sitting up there in washington. you know how they make the sausage down there. you're willing to buy health care here when you see what's happen something. >> if you buy them on the valuations i think so. i'm trying to stay out of the, you know, the headlights. i'm trying to stay out of the truck headlights here of the most heavily regulated areas. they'll really haven't done very
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well and they still look cheap so i think there's money to be made there, certainly for the long term. >> what do you think about health care as we talk about the president eats plan to overall in. >> we're certainly nervous and i think there's a lot of that 45ed line risk in the stocks. once we get a plan, regardless of what the plan is, we'll have a sense of certainty and then we can price. plan in. >> that would make sense to see a rally once we know what the outline is. >> when bill clinton came into office in 1992, health care stocks were down about 30 to 40% over that 93/'94 period. once that risk was eliminated, then stocks rallied. >> and it was a fabulous buying opportunity. >> it was. >> all righty. both of you, thank you so much. coming up, middle east has lost its hold on the oil market. russia now the world's biggest oil producer, not saudi arabia. is that why oil markets are ignoring iran? we'll be right back. do you trust your coworkers,
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brand new data shows a watershed event happened. russia became the world's biggest oil producer. yes, bigger than saudi arabia. russian oil production exceeded 10 million barrels a day in september. since they are pumping at full speed means lower oil prices. this is the editor of "the shorke report." guys, good to see you. steven, i'll start with you. what do you make of russia becoming the biggest oil producer in the world. a year ago we were talking about declines in russia? >> that's russia being russia. i was at the meeting in march with opec. they sat in on the meeting and they actually took saudi arabia, opec but read, saudi arabia, to task for not adhering to their products quotas and he went through a laundry list of the
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steps his government has taken leading export credits and so forth. here we are six months later, surprise, surprise. russia put more oil on the market. >> russia is doing the cheating. even though they're not official members of opec -- how much is about russia and how much is about saudi arabia is sticking to their quotas is? they could outproduce them, couldn't they? >> yes. they have been year under producing their quota, if you will. >> their producing less of x to make up for everyone around them who's probably cheating? >> exactly. and it's up for them to build up the chips for when the times get tough down the road if the oil price cracks and their able to call in everyone and say, we did it for you a few months back. now you need to get on board with us. >> should we worry about what it means politically about what russia means? >> maybe this is a bit of a payback for the missile shield
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policy. their more inclined to be more favorable towards western and u.s. interests. they don't so to tweak us so much with the oil. >> steven, do you agree? does it help keep oil prices down? >> i mean, at this point my only fear with russia, michelle, is that unlike the venezuelans, they never do, the russians do. every winter and mark your calendar, it will get real cold in a couple months in northern europe and we'll see the cut-offs in gas going via the ukraine into western europe. the russians love to use energy as a weapon. i agree it's good to have another 800-pound gorilla on the block -- >> a year ago oil was going $147 a barrel, in part because of tensions with iran. now we've got this new uranium location. why no reaction from the oil
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markets? >> i'm not sure there hadn't been a total reaction. i thought when the announcement came out on that friday a week ago it stopped the selloff in its tracks. i think there's been a lot of bearish knews that's been shaken off by the market. this is a very, very -- this is the trickiest i've seen the situation in a long time. there's hope in the sense that ahmadinejad's missteps has been not to make some kind of better relations with the u.s. that's what the opposition is all about in iran. >> let's get down toe steven. what do you think. over the next year or so, what will ewe see when it comes to the price of oil? >> in between the mid 70s and mid 60s. the head of petro brass which sits on a carable amount of oil is on record -- of brazil, is on record saying that he's happy with oil between $45 and $65 a barrel. he has his cap exfinanced for the next year as $65 a barrel.
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the guy pulling the oil out of the earth, likes oil as $65 a barrel. on the other hand, we have a bunch of wall street guys telling us oil belongs back in the triple digits. the at this point it's anyone's guess. i'll tell you this. if i'm a trader i'm breaking. we break the mid 70s i've got to be a buyer on the expectations we're going higher. conversely, we break the range, i'm a seller. >> technical call there. john, what do you think? >> i guess i'm chief among them. >> no offense taken. >> none intended. >> so, steven -- >> i'm just kidding. i do -- i am in the camp that we're going higher. i think because the dollar is going lower, i don't have much in the way of optimism for this iran situation. at some point i see israel, in particular, reacting strongly to this. this will be an upset for the market. i think the china situation is underestimated. >> the china situation demand,
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increased demand from chie. >>? >> very much so. >> steven, last word? >> yeah. again, i'll leave it off on iran on that note. if we couldn't take out the iranians when we had that cowboy in the whouts there's no way we're going to do it with the reincarnation of jimmy carter. >> be sure to tune in tomorrow. larry has republican senator, greg and we'll see you tomorrow! hi, may i help you? we're shopping for car insurance, and our friends said we should start here. good friends -- we compare our progressive direct rates, apples to apples, against other top companies, to help you get the best price. how do you do that? with a touch of this button. can i try that? [ chuckles ] wow!
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